Is growth of sustainable aviation fuel in the market set to soar?
Fastmarkets AgriCensus editorial director Tim Worledge explores the opportunities and challenges facing the sustainable aviation fuel market in a post-pandemic world.
By any measure, the global aviation sector has been hit hard by the onset of the global pandemic. Reams of corporate results from the sector’s biggest players have revealed eye-watering losses amid a huge drop in passenger numbers. This followed embargoes on international travel and curtailment of routes.
Governments are also beginning to promote the use of biofuels in the sector in response to transport decarbonization. Sustainable fuels are positioned to play a key role in this move to a greener future.
While freight has offset some of the lost activity during the height of Covid-19, it’s a drop in the ocean compared to the mainstay of passenger demand. 4.5 billion people travelled by plane in 2019, according to the United Nations’ International Civil Aviation Organization.
That figure is likely to have fallen to around 1.8 billion in 2020. This demand shock is likely to pose problems for aircraft makers, airline operators and the myriad of services that support the sector. And that’s without getting into the impact that the upward creep of oil prices could yet bring.
Already facing multiple challenges, the sector is in a fragile place. It now moves to address another mounting challenge – its environmental footprint.
The footprint of flying
There are huge leaps now being made in personal transport. Powertrains move away from oil and toward alternatives. These range from batteries to synthetic gas to hydrogen - a fuel with a checkered past in aviation terms. The airline sector is increasingly standing out as a big emitter of greenhouse gases (GHG) that it currently has only limited options to address.
In net terms, around 2% of the world’s GHG emissions stem from the sector. It isn’t one of the biggest global offenders, but a lack of solutions to decarbonize the industry means it is lagging most other forms of transportation.
Which makes aviation the last bastion of unadulterated oil demand.
Consider the basics. How do you take a 400-tonne lump of metal, carbon fiber, rubber and plastic, fill it with 350 people and all their luggage, throw in a bit of freight and then hurl it through the air at 40,000 feet, at just under the speed of sound for 10,000 miles?
Raw oil-fueled horsepower has been the solution to date. Liquid fuels are likely to continue to be the mainstay of any solution.
Modern aircraft are lighter and more efficient than ever before. They burn on average around 5 tonnes of fuel per hour. Compare that with the icon of oil consumption, the Concorde, that could whisk passengers from London to New York at twice the speed of sound, burning a profligate 25 tonnes per hour to do it.
Fuel economy, in addition to a fatal design flaw, grounded the Concorde but the industry response to Covid has already signaled the end of the super-jumbo era. Operators and manufacturers now look to further streamline aircraft design.
Airbus recently ended production of its two-decked A380, while airlines such as British Airways - the biggest operator of the original Boeing 747 jumbo jet - brought forward the retirement of its entire fleet to cut capacity and save on its fuel bills.
But technology and retirements can only achieve so much. The onus is increasingly turning to solutions that will bring an immediate impact in decarbonizing the sector. That, inevitably, brings the spotlight to the fuel used.
A focus on biofuels
Governments are acknowledging the increasingly obvious gap around aviation in the response to transportation decarbonization. They have stepped up plans to promote the use of biofuels across the sector. Many consider increasingly stringent mandates and are poised to demand sustainable fuels play a greater part in the landscape.
But a lot is asked of any aviation fuel. Average engines on the newest fleets of airlines will deliver up to 90,000 lbs of thrust per engine. They must operate reliably in the harsh, cold environment at 40,000 feet.
The sector has had some successes, with sustainable fuels used in a limited number of passenger and freight routes recently. But, to drive economies of scale, the hunt is now on to unlock production on an industrial scale.
And that’s the key to allowing advanced biofuels to play in this space.
The path ahead
Clear mandates set out a flight path for the fuel’s adoption and use. Increasingly, the sector is leading the decarbonization debate. This is while innovators turn to new technologies or reliable older chemical processes to boost production and scale up promising demonstration concepts.
That is pulling in an ever-wider slate of feedstock, from algae to household waste, from corn through to forestry. Aviation’s thirst is set to bring fresh disruption to existing commodities. It will challenge the use of used cooking oils in biodiesel production, adding another dimension to the pulp and paper industry or even disrupting the role of corn within ethanol and animal feed use.
The ambition is large, and it needs to be. Even against the backdrop of pandemic, the United States alone burned nearly 10.3 billion gallons (350 million tonnes) of jet fuel in 2020. It is already showing signs of powering back toward pre-pandemic levels of up to 18 billion gallons in 2021.
At a basic 5% flat blend mandate, that will generate demand for 17.5 million tonnes of jet fuel on Covid-based data versus current production levels that amount to around 100,000 tonnes equating to around 0.05% of total European Union jet fuel consumption.
The EU is looking to deliver a mandate of 63% sustainable fuel by 2050. The sky is very much the limit.
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